Asian currencies may face pressure after Fed’s expected September hike

  • Fed signals additional tightening after September’s expected hike, Asian currencies face further pressure.
  • Higher Treasury yields, softer risk sentiment and elevated oil prices weigh on regional currencies.
  • Indian rupee remains vulnerable to the energy shock, while won and Taiwan dollar are flow-sensitive.

Asian currencies remain vulnerable to further pressure if the Fed signals additional tightening after a widely expected rate hike at its September meeting, OCBC FX Strategist Christopher Wong says. The dollar’s latest upswing has been broad-based across major and Asian currencies, supported by higher Treasury yields while softer risk sentiment and elevated oil prices weigh on higher-beta currencies, lower-yielders and oil-importing currencies. The Indian rupee is particularly exposed to the energy shock, while the South Korean won and Taiwan dollar are sensitive to equity flows and broader risk sentiment.

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